The repeated failure of crypto companies to gain regulatory approval in the United States has given the industry a “universal conviction” that the country’s financial regulators do not want crypto to thrive. said an intelligence officer. report.
According to the report, U.S. financial regulators have made it “infeasible or Impossible.
Blockchain Association CEO Kristin Smith said:
“It feels coordinated. It feels like carpet bombing.”
While the government has repeatedly denied that it is against cryptocurrencies, the actions of regulators in recent months, particularly those of the Office of the Comptroller of the Currency (OCC), paint a different picture for the filing of cryptocurrency-related companies. ing.
Protego
The OCC recently rejected the Protego Trust’s application, despite granting the company conditional approval in 2021. The company wanted to provide cryptocurrency custody services to institutional investors and had no intention of engaging individual investors.
According to the report, Protego was “reverse engineered” to appeal to DC decision makers and smooth the regulatory approval process. The company raised his $80 million and quickly received conditional approval for a $2 billion valuation.
But the OCC rejected Protego’s application for a national trust charter on a previously unmentioned “expertise” after meeting the requirements for full approval in February, a person familiar with the matter told the paper. .
Protego founder Greg Gilman said:
“In the end, it feels like there was an unannounced and unexplained policy change that derailed our efforts.”
Protego is built to appeal to the regulatory environment, but its experience has been similar to most crypto-related companies trying to secure domestic approval.
Operation Chokepoint 2.0
Regulators’ negative stance on cryptocurrencies marks the return of Operation Chokepoints, an Obama-era policy to stifle certain politically disadvantaged industries such as gambling, tobacco and pornography, the industry said. claims.
Under this policy, prudent financial regulators made a concerted effort to cut off access to banking services in these industries on the basis of often arbitrarily defined reputational risk. The practice continued until Congress stepped in and made rules to prevent it from happening.
However, the Biden administration scrapped the rule after taking office. This has raised concerns that regulators are once again trying to “unbank” a disadvantaged industry, with cryptocurrencies becoming the latest target.
Some members of Congress recently wrote to prudential regulators highlighting these concerns, exposing all communications with cryptocurrency companies to investigate whether unfair practices are re-emerging. I instructed
Meanwhile, Congress recently held hearings where industry experts and participants testified about the myriad of hurdles and frustrations around the regulatory process. But lawmakers have yet to take any action on the issue.
This sentiment has also been echoed by observers in the political and legal community, according to Intelligencer’s report.
A former regulator, speaking on condition of anonymity, told the newspaper:
“It’s different from the original Choke Point, in that they’re pretty public about it. No one guesses their point of view. Another difference is that it’s actually wider. “
